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tv   Squawk on the Street  CNBC  August 14, 2013 9:00am-12:01pm EDT

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its greatness again? apple is not broken. apple may be taking a break. >> do you remember block buster? do you remember time warner? >> time warner. >> right now. he said right now though. right now is calls this year. >> same tactics. is it working now simply because he's hitting cash rich companies? >> dan, thank you for joining us. be back here again tomorrow. we'll see you tomorrow. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street." i'm david faber with jim cramer and scott wapner live from the new york stock exchange. carl quintanilla has the day off. futures holing on to their losses after earnings, well, an earnings miss for may macy's and wholesale prices were flat for july. ten-year note yield is worth noting at this point as you can
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see there. 2.71%. yeah. let's move on to europe. second quarter gdp data indicating eurozone emerge by recession. in and also some growth in france. and that gets us to our road map which starts with a rare miss for macy's. shares of the department store are falling in the pre-market. the ceo says consumer are worried about the uncertain economic environment. apple still getting the icahn burp thmp this morning. carl icahn tweeted he bought a stake in the tech giants. and strength on the farm. deere beating on the top and bottom line this morning, citing strength in farm equipment sales. bill ackman speaks out about the villains of the capital markets in his public bat with other high-profile hedge fund managers. >> man. a lot of personality. a lot of personalities running around there in vaktism land. he's start with shares of
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macy's. down sharply in the premarket. retailer posting the second quarter results that were below wall street forecast. same-store sales fell 0.8% from one year ago. ceo terry lundgren saying he is disappoint we'd the results. macy's lowering the earnings and comp sale guidance for the full year. interesting, i do go back to an interview i do with david berman. that was on monday. he was very negative. in fact, saying while consumers are okay, soft good retailers are not -- people are making decisions about how to spend their money and they're going with the same sunk, the apple, the hard goods on amazon, as opposed to retailers. at least so far that these seems to be proved right. >> rather amazing where people are spending money. spending money on vacations. we know that from hotel. we know that to spruce up their house. perhaps because houses are going up in value. they are not spending a lot of money going to the department store. i got the tell you my first take
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when i read this wasn't, wow, how disappointing. it was, what are the numbers going to be at jcpenney if macy's is this bad? >> great. >> oh, boy. here we go. >> probably not going to be all that great, right? i don't know. retail in general -- retails are a real worry though. >> it's not the key month. right? >> no, but the numbers that have come out from the teaen retailes have been ugly. if you take coors out of the mix of retail discussion, it's been bad across the board. >> that's true. >> almost across the board. >> now i want to circle back and look at a couple of stocks. gap and costco don't look so bad. >> two of the only retailers still reporting monthly comps. we get so few of them that we don't get as good a read perhaps than reused to. >> sure. >> but you said it, jim. i'm curious. let's follow on that thought. macy's, is that just the beginning?
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just the beginning of what's going to be a bad season here? >> why did lundgren specifically point out that back to school is encouraging? lund xwregre lundgren, yes. it's difficult because lundgren has become the benchmark. to go back to berman. i've known him for years. to hear him uniformly negative is worrisome. he said by the week, macy's, don't sell. buy it, don't sell. >> inventories were up, too. >> somebody has got a macdown. that's why i came back to jcpenney. it's interesting, by the way, johnson did have this kind of idea of building up the house wears, which have been good. and that's a big hole in the store because the johnson strategy was aborted. but it just seems like whatever penney did was wrong. whatever they did. >> you mentioned the markdown angle. that's going to be the story, i think, in back to school. and even as you head later out into the holiday season, if you're going to draw traffic
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into your store, and you're going to ring up a lot of sales, you're going to do it with the big 50% and 70% off sign in the front window, don't you think? >> let's see what pvh has to say. the -- one of the thingses that incredible now. these -- pvh is 50% of the tie market, you go and buy a macy's shirt. >> antitrust regulators. >> they broke up. can you believe it? the airline -- >> we sat there, usually listen "mad dash," he was like, it's going to be great. it's going to be great. eric holder and bear were listening. >> i remember when i saw -- >> it's a mess. >> when i saw eric holder i walked by him at white house, off the record, i walked by, you know because i was there. he, he's going to kill me because i've been saying it's the rip van winkle, pro trust department. moved antitrust over to commerce. holy cow, did they wake up.
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that's why i like u.s. s airway. they cut out the snack box and get rid of the doers, right? which i already criticized because i wanted them. and you know what they served? they served thunderbird. >> thunderbird is very good. don't knock it, really. >> i didn't know that. am tingle pink, do you go there, too? >> i will go wherever i need to do. >> train? wood alcohol? >> won't go there, either. headaches, man. >> stir it up. let's talk about what wall street is buzzing about this morning. of course, late yesterday carl icahn's large stake, it is a large stake, although still small when you compare it to the overall market cap. in am, icahn calls apple undervalue. increased stock buyback could push the shares up to $700. icahn says he had a nice conversation with ceo tim cook and that they plan to speak again soon. you know, probably very good friends by now. apple shares now in breaking distance, of course, of 500. talked about it yesterday right
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here. sort of the lack of attention as stock was moving up was interesting. they already had a large buyback in place. they already borrowed more money than any company hasbroed to fund what is the largest buyback. it will be interesting to see after a 5% pop yesterday whether we get any follow through. >> why would apple be -- you will see amiable. amiable is the word. toward icahn -- that's what carl told me it was. that's his words. >> very thoughtful guy. right? and i don't present a financial engineering thing that was not as good for the company as the bonds deal they did. why is this amiable? why is the icahn call amiable? it's certainly not amiable with michael denton. >> that's a very different st y story. >> they were criticizing and going back and forth. >> southeastern has significant influence and has been a nasty battle. to be -- take a $3 billion
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position there and you own a lot of the company. here, take a billion and a half position and you hardly own any of it. >> when you're tim cook, also, when you get that call from carl, at first you're like, oh no, and then you're like, i wonder what is this guy's motive going to be? so, yeah, the first conversation is, amiable. >> right. >> but if carl applies the pressure that he's been known to put on these types of situations, where does it go from here? >> one of the things that we talked about on "squawk" going back and forth, what icahn really know about apple? does he know about apple, does he know about netflix, does he know about -- >> i would argue that -- and i have followed carl for a long time, talked to him for many years. i would agree with your earlier assessment. he's having an incredible, incredible run. i think he's got over 20 being, maybe up to 22 billion in net worth. it's all his money, too. no outside investors. >> right. >> he's completely free to do whatever he wants. >> that's an amazing point. >> i would argue that he still operates largely. he's got a lot of smart people
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who work for him, does numbers. he knows his way around a balance sheet well. largely operates by instinct. i feel like they're getting taken advantage of on dell. i think apple is cheap. you've had the conversations. that's what they are, largely. if you expect him to explain to you why time warner should be broken up in the media business or why yahoo! and microsoft make a good fit -- >> i don't think carl is going to have a discussion of why a two-inch larger or couple sent meters larger screen is going to make a difference. >> which is more valuable, cutting price target on apple, going down, raising it, going up, or icahn just saying, you know what, i understand companies. this one is too cheap. i would rather go with the latter. i don't need that grandular. >> i know. i just wonder what took him so long. it's been cheap. >> maybe he bought the bottom. maybe he did that. >> by the way, the strategy of this new oh we his discovery of twiter is fascinating as well.
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side story here. >> but it is interest that he uses to disseminate market moving information. >> he wants it to be a bigger part of the story. right? >> that's why he did it the way he did it on this one. >> did ackman say something negative about a until could this be just one more death match? >> i don't believe he did wander into any discussion with apple. >> not even at 380, ackman didn't go short? >> i think to david's point though because this is carl's money. this is a potentially dangerous place for tim cook. don't you think? it's one thing when david einhorn comes down with a strict. if carl wants to shake you up carl doesn't care, he's going to shake you up. >> those who have gotten the call from him, aubrey mcclendon, former ceo of chesapeake found icahn, very reasonable man, has good ideas. it's not like mike wallace online one, the old joke, the most -- the most diangerous cal
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in the world. icahn is a guy you've got to listen to because he's been around forrer but einhorn has been around forevered. and that one was not amiable. >> and they fought him very quickly and rather successfully. now, you do get back to the point that there's not how much can an icahn do in a largest market capital in the world. it's not as though he can take a sizable position and threaten me could move to a proxy fight. you don't know where all the large shareholders stand. but it seems unlikely at this juncture. but it is interesting to note an activism generally we have seen a willingness of some of the well-known players to take positions in extraordinarily large companies which they can never get to a point where they say we're going to try and bayou or affect change for a huge ownership stake. whether it's it was bill ackman and p&g or whether it's carl icahn here. >> that's what i'm talking about here, which is ackman never threatened to take over proctor. value -- we keep talking about
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how most, positive. that's all i'm saying with icahn. does he want board seats? you can put that out there but in the end, i would rather take his call and work with him because he's pretty smart. >> meanwhile he's up $75 million in position. >> quickly from a stock standpoint, this puts in absolute floor on the stock, don't you think? >> herbal life floor. all right. coming up, the most innovative companies coy ies according to . and there are names that didn't make it that might surprise you. let's take another quick look at the futures as well as we get set for this wednesday on the street. implied open slightly negative across the board. more "squawk on the street" live from the post nine at the nyse when we come back. ♪
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fraud. >> why is this stock going up? >> simply because carl icahn and others have been promoting it. that's why. ultimately -- >> mean that the people in the investment communities believe in carl icahn more than they believe in you? >> certainly on this investment, yes, that's the case. >> they were talking about herba life there. >> in which he also told charlie rose that icahn used the herba life investment in ackman's words, to get back at me. right? for this long-standing feud that they've had going back about a decade. the other interesting part about this interview, i thought, was where he refused ackman to say that he respected dan lobe when asked by charlie rose whether you respect him. well, he's a good investor. >> their feud is an interesting one here, too. that is nasty. i believe traces its roots to the target investments. special purpose vehicle.
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>> yeah. >> i believe loeb was an investor. a lot of people are upset with ackman. it was a terrible loss. >> 90% of -- yep. >> in that spv and where some argue they were using options and they weren't aware it was going to be an option. led position. loeb for his part would say, wait a second, he's exaggerating where i said herba livestock was going to go. loeb in his letter said i think it's worth 65 to 68. if you look at a ten to 12 earnings multiple. that was a bipg side from where he bought the stock. loeb made money. >> what about the whistle-blower thing where ackman is going to finance people who want to talk badly about herba life. i don't like to see anything in a product that i buy. an article in the times -- >> coauthorered by andrew. >> our own. i have to tell you, ackman should be giving millions to
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eliot spitzer because a spitzer controller would take up this herbalife situation. >> don't forget spitzer investigated his first hedge fund gotham back in the day when ackman was very early in this idea of publicizing your positions, whether it be long, i think, or short, prepaid legal. >> right. >> that hedge fund blew up. spitzer investigated it. then they said we're not going to do it. >> it's not another blood feud. i'm going say this about ackman right now and it's good, okay? a lots of people think he's cool. >> okay. >> i'll let that stand. i'll let that stand. >> i had to say something positive. >> cramer has a lot of other messages as well as we countdown to the opening bell. you're going to hear what's next in his mind in the mad dash. let's look at futures before we hit the break. you can see we are setting up for what appears to be a lower open at this point. we have a lot more "squawk on the street" straight ahead. right now, 7 years of music is being streamed.
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one a day men's 50+. ♪ all right. time for that mad dash ahead of the opening bell. we've got 8 1/2 minutes or so before we start ring that bell here on wednesday. let's talk retail more given macy's miss. >> coors, we mentioned earlier is good. macy's, sequester, unemployment
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insurance payment cut dbacks, flu furlou furloughs. debt ceiling worries. >> gasoline prices. >> gasoline prices. i think they're doing t pretty darn well given that laundry list, the headwinds against the consumer. that's why don't want to bet against the consumer. >> you're softening your stance a bit. >> right. the headwinds were so incredible. i can't believe that everybody didn't do much worse. they didn't like flow throw in the weather. here's the controversy. have you ever been to seaworld? >> i have. >> have you ever been to disney world? >> i have. >> i find them somewhat close to each other geographical. seaworld talking about far to be dead. i went back to bob iger and what he said on the disney call, they had extraordinarily good results in orlando. so here's my conclusion. orlando must be under the dome. right? kind of like that cbs blow away in the steven king book because it must not have been raining if disney world -- they had great
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numbers. there was also a documentary not included in the numbers about orca, you know, i don't want to slam seaworld because i like management here. just be careful buying this one. when cedar fair symbol fun sand six flags, symbol six, with much better yields and better numbers are better than seaworld. >> to be fair they do have seaworld in san diego. >> virginia wasn't that good. yeah. but i just thought it was important to point out that hey got good weather at disney world and seaworld talked about it. >> seaworld in san diego, disney world in orlando. that's when the kids were younger. go to legoland and seaworld and the zoo. >> six months? >> not for a long time. >> did you go on the magic mountain? hey, let's -- let's go back -- >> let's go back to -- let's end on coors here. >> so all these things that i mentioned the retailer,
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sequester, these are things that didn't bother the rich people. that's why i think they're still spending on michael kors. the kors bags are so much more expensive than regular retail. if the rich are unhappy, laal, my great, great uncle, it's their own darn fault. one of his greatest quotes. >> yes, gra rk, agreed. it's their own darn fault. >> that was not nice. >> no. >> not nice at all in mexico with a ice pick. the opening bell is a few moments away. "squawk on the street" with me and vlad and the judge coming right back. magazines, along with
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yet, interestingly, better than expected perhaps, not expected. deere. >> yes. now, you would say why did that immediately spike to $86 when that news came out about the quarter? and now back to 84. and the answer is is, anyone who has ever been on a john deere conference call is supposed to ride a john deere tractor like the gator that i had is just always agast. the company has been able to talk down the stock consistently. people want to hear the 10:00 call and come in and start buying the stock. brazil, big brazil zil foreign program. i had agco on "mod money" and i think they're going better than deere. the construction and forestry numbers were awful for deere. people just want to wait. maybe this is the conference call where they really get it together. maybe they finally say -- >> the show that you've got to be careful buying the stock. >> wait for the call. maybe they give you a chance. better quarter than i thought. deere expectations. a lot of people downgraded, cut
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numbers last week, deere. it's the opposite of macy's. people were negative, okay? and now, well, you know what? it wasn't as bad as pecked. >> but you still like some of the other names in that space there. >> i like agco so much more. they're going great in europe. they're young. they're pure ag which i like. farmers are pretty flush. this group has been on the ropes because of the pot ash, because of the great cartel that broke up. where was the department of justice in the fertilizer cartel which we didn't even know existed until it broke. >> also now thinking about corn prices coming down sharp lid and what impact that could have. >> and deere did have negative things to say about crop price which people are going to say if they're on the call saying, listen, it can't be as good as it was because crop prices are down. and he would have said why did i pay 86, why did i pay 85. >> not really, forestry, construction not good. but, you know, look, caterpillar is engines. it's engines and it's china. whether we like it or not.
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they don't even have that much china. everyone decided it was china. >> i keep going back to somebody on your "halftime" show who said they bought a company that didn't exist. devastating. >> the opening bell here at the new york stock exchange. s&p 500 back -- the big board is ring that bell. provider of medical services celebrating the initial public offering today. over at the nasdaq, baby quest, a charity for those who cannot afford fertility treatments. all right. here we open. >> wouldn't surprise me at all if while we're on b the air that apple goes over 500. it's up again. the follow-through on icahn is at $498.52. it's up another almost 2% this morning after this big move yesterday. >> you know, when we bought netflix, i mean, that was one where i remember a lot of people
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were saying, what? netflix, they're probably going up with "breaking bad" on it. that was one of the greatest buys i've ever seen. >> it made a billion dollars. >> still own it. still holding it. >> speaking of -- that was his son that made that recommendation as was this, i believe. he's trying to bring brett in, it seems, more of what's going on. >> not a one-man shop but all his own money. i thought netflix, why is this guy climbing up the underestimated. now i think people are saying, listen, if he's in, i want? >> there was a comment that larry ellison had made yesterday or the day before, how apple wasn't going to be the same without steve jobs, how the company was going down. i asked carl about that when i spoke to him yesterday. and he said to your guy's point about netflix, he said, yeah, a lot of people thought netflix was going down, too. >> and it hasn't. >> i didn't hear that in the interview. of course, that my bad. ellison, a man i respect, you
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respect. at the same time, everyone would expect that steve jobs, jobs at apple is not as good as jobs at apple. that's what i'll thought was so strange. that that comment was as controversial as people thought. henry ford not as good after henry ford. >> sure. larry ellison can be -- reputation of being a little bit biting sometimes and n. some of the things that he says. maybe that's why it had or at least the -- it was picked up as having maybe a sharper tones that originally intended. who knows. >> i think that's right. ellison famous for just being mixing it up a little. controversial guy. sales force, benny was in a feud over ellison but he said, listen, there really isn't a feud. next thing you know they're in partnersh partnership. ellison speaks loudly but doesn't have a big stick. he's well liked behind the seat. people like him. >> interesting to know as apple
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does continue to climb a bit, almost up 2% on the session and very close to that $500 level. this idea of borrowing to buy back stock, of course, is not a new one. in fact, i talked object viacom yesterday. >> viacom. >> apple has done it before with that enormous debt offering it did. by the way, at the lows of -- and then using that to -- the low of the interest rate. >> thank you. >> it's going to go over five any minute, by the way. >> as we watch apple yet again. it does much better when we don't talk about it. >> doesn't it? 200-day moving average. tim cook was initially not responsive about the idea of doing a buyback. he was. they do have a lot of capital. they don't need all that capital. >> the dividend as well. >> a lot of guys respect it on twitter. you like netflix so much. maybe carl says why don't you get some growth. why don't you go buy netflix which i have said over and over gad is a good idea in order to have apple. it's like a rounding. >> i'm sure carl would love to see that.
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nice premium. >> i was talking yesterday about google and dish. buying -- this is off the record but i think 700 is the right price. >> the stock did get a little cheap. why did he stop at 00? wouldn't that look like a double top? what is that? >> we're looking at september 10th, right, for the next iphone or iphones? >> it comes a few weeks ahead of what is expected to be a big event. it has to be a big event at this point for apple, right? >> doesn't the street, the analysts, they all decided that the phone's a flop. i haven't seen it but it's a big flop. like the old days and microsoft. microsoft is issuing up sell. the expectations got so slow. 475 and 500, what do you do? price talking about 500 and just hit 500. are you going to go out tomorrow and cut your price target knowing that carl icahn is
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trying to get something done? no. you'll raise your price target. tomorrow will be another apple on deck. >> how much is the debt down? >> a quarter of a percent. >> well, isn't that good? >> yeah. not too bad. >> the ackman portfolio. jcpenney is down. air products is up a bit. >> down. >> haven't looked at proctor. >> deere is now down. >> i hope it's not because i said wait for the conference call. i don't -- as i said, you know, various times, have been long deere. okay? and it's like, oh, please don't say that. please don't say that. deere is a play that bombs every time. even if the story is a good one, the play is poorly executed. >> when is the time to do that? after the conference call? >> no, buy adco. it's the company right now. better financially. deere makes a great tractor.
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you guys ever been on a deere tractor? you like deere? go buy a gator. >> when was the last time that am was above five do, we know? it's been a while, right? >> it has been a while. up what? >> it seems like forever. >> we have to now start measuring it versus exxon, in terms of market cap again. you were talking about the size of icahn's position. if you took a bic stag stake in exxon. he takes a stake in apple. >> i don't know if that's the case. >> i think at this point if he were to take a large position and tweet about it we would be paying attention. >> interesting. >> this is what had been the most loved company on earth. not only the one with the biggest market cap, the one with the biggest love. >> right. if he bought this stock between 380 and 410, the legend continues. legend.
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>> i believe we're going to get a press conference from the ntsb any moment now. we're moments away. ups flight which we'll remind you from louisville, kentucky, from birmingham, alabama, two crew members and we will hear at least initially from the ntsb on very very earliest reports on what exactly may have happened in that crash. >> i want to go back to that stock. cree. >> we're going to go to ntsb right now. >> okay. >> here it is. authorities are investigating the ups cargo plane that crashed outside the airport in birmingham, alabama. >> good morning. i am robert somwalt and i am a board member with the national transportation safety board. the ntsb is just now launching to investigate, to begin the investigation of a ups crash
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involving a ups airbus a-300-600. this airplane was plying from louisville at a -- it crashed while approach to runway 18 at birmingham international airport. before i go any further, on behalf of the ntsb i would like to express our sincere condolences to those who have been effected by this tragic accident. we will be launching here from the washington airport iport ina matter of minutes. in addition to our go team, we have an investigator from atlanta who should be arriving on scene any minute now. we will be arriving before noon birmingham time. the ntsb investigation will be led by an investigator in charge, dr. dan bauer and he
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will be acompany anied by experts in structures, power plants, systems, air traffic control, human performance, aircraft performance, and a number of other disciplines. also accompanying the go team -- also accompanying the go team will be representatives from the ntsb's office of transportation disaster assistance who will be assisting with those family-related matters. for the latest information on our investigation, we would encourage you to follow us on twitter, and our twitter handle is@ntsb and follow us on our website at we do want to hurry and get out to the airplane so that we can get down to birmingham, get our
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boots on the ground. before i go i will answer three questions. first question? >> how is the chief pilot involved in the crash, any other -- >> are there any updates on the -- any information regarding casualties. the information regarding the extent of the casualties will be released by the local authorities. >> do you know when it was actually on the runway, do you know? >> where did the airplane actually crash, was it an approach or did it crash actually on the runway? we have not been there of actually get there and survey it. that's exactly what we will begin doing once we get to birmingham. we will be documenting the wreckage so that will be part of our investigation. i'll take one last question. >> large fire, do you expect to recover black boxes? >> do we expect to be able to recover black boxes? we have not even gotten there to be able to look at the wreckage yet. but i will tell you that the
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board has very good success rate with being able to recover the recorders. so at this point i'm optimistic that we will be able to recover those. so we are going to get on our way. we're going to board an airplane. again, we should be in birmingham by noon their time. actually we should be there by 11:00 there time. >> there you have ntsb official giving the initial at least briefing on that plane crash, ups, a cargo plane. not much to share there. the investigation about to commence really is what it will be, and so did not have a great deal to share in terms of cause or casualties or anything else at this point. >> you had mentioned when apple had crossed over 500 last. it was back in january. >> right. >> it did just immediately bounce at 500 and go right back down. that's important. people are busy trying to get it over 500. it's not -- it's just a psychological level. >> psychological. it got within seven cents this morning. then pulled back a little bit.
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i don't know. maybe there's a little bit of resistance, right, at five? >> i'm sure there's going to be a backlash about what we said. people will say that is totally -- what matters is the quarter. but i think what you pointed out, which is did i put in a bottom, i mean, you know, people are never going to look that the stock at 380 again and feel the same way now that icahn took a position. they're just not. >> i agree. >> you heard the ntsb official say follow us on twitter and mr. icahn using twitter to disseminate there. i can only imagine how many followers he's added in the last 12 hours. thankfully carl to follows you and me and we benefited from that. >> carl, would you follow jim? >> you got a million -- >> you have a lot of followers. >> we're trying to get somewhere. >> we want to be somebody. >> sole percentages. >> i'm defriending him. >> let's get to bob pisani. i assume that ipo is pricing? >> envision health care provider
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of outsource medical services, $25.25. now they priced at 42 million shares. that was above the share price talk of 35 million. the initial price talk was 20 to 23. priced it at 23. it opened at 25.25. this was very am bushes price for this kind of company. it's highly leveraged as well. as you can see, the initial reception is good. $25.17. a little to the downside here. utilities are weak. discretionaries are weak. telecom, staples, a little bit on the weak side here. over in europe, the gdp numbers were a pleasant surprise pap lot of people were concerned about germany up. gdp second quarter. france is up. these were very good numbers. there were some disappointments. southern europe still isn't going anywhere. italy, down. there's the weakness in europe. deere, i know you guys have commented on deere but the constructionary is where the weakness is.
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that's 20% of the business. lowered the full year sales guidance for construction but they left the guidance tort agriculture division. that's 50% of the company there. that's what matters at deere. still up 7%. that it didn't change that. they had initial guidance for 2014, what's called cash farm receipt, loose cash flow estimates for 2014. it's down. i know it's not good but it's better than what some analysts were expecting. overall, a pretty decent report. it's hard to guild the lilly on macy's. the bottom line on macy's is the consumer is spending elsewhere. spending on real estate and autos. here's one thought for you guys. macy's stopped reporting same-store sales numbers in january. now, we all know analysts a s s lazy. it's easy to do nothing. all you do is plug in the store numbers into your model and you get an updated figure. once yeah stop, the analyst didn't have monthly guidance. now all they get is the numbers after three or four months on
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the earnings reports if up -- the point is that they missed the sales estimates badly. the analysts are the ones who provide the estimates. i think the analysts knew do a very bad job of updating their models because they don't have macy's to fall back on and provide them with some kind of support. so here's my way of saying the analysts have got to get a lot better at creating more models and creating more value over all. i know that you guys have talked about this a lot before. jim, back to you. >> thank you, bob. price target up, price target down. following the stock. you introduce the penguins a long time ago, david. very good call. let's check the bonds and the dollar. rick santelli is at the cme group in chicago. hello. >> good morning, gym. by the way, gym,jim, i have to you you were among the view looking for positive news early in europe and you are correct. now the debate has turned to they're seeing some better gdp growth in europe, up 0.3 quarter over quarter. we were there one point when we
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escaped our negative gdp and it's been years since. structural employment is now what europe probably has to look forward to. rates. you know, there's been a big debate. in equities, all they want to talk about is a taper. i don't think that's been the biggest driving force. the only driving force in rates. i think they've been pricing in europe. it's been pretty darn accurate. if you look at a one-day chart, today's inflation data really didn't figure in. a two-day gives you the real picture. move tire yesterday. lateral distributing some of that sell that pushed rates higher. if you open the chart up to 20th of june, how many times i have i used this chart? we are in a zone that is clearly getting ready to test and with the momentum it seems to be building, that high yield close going back to august of 2011 at 2.74 on the fifth of july. now, if we look at europe, hey, they've popped through. they've popped through to the other side. they are now at the highest yield since march of 2012. doesn't comp as long as us.
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you can clearly see the spread is moving between ten-year. foreign exchange. look at the year to date chart. it turned. also is pricing in europe because the good news is out and the euro is going down. maybe the wide range is 128 to 124. looks like it may have bottomed. many technicians say the top of the range is 83. we'll have to see. back to you. >> rick santelli, thanks. let's go back to headquarters now. >> say nice things. >> yes. >> of course, have to say me. >> kelly at head bauer -- >> scott, the u.s. attorney for the southern district of manhattan has indicted two former jpmorgan employees as anticipated. two traders who formerly worked in jpmorgan's chief investment office in london and the charges on each man are four counts of securities, wire fraud, and attempts to falsify records to the s.e.c. associated with alleged efforts to mismark the
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value of positions in structured products they were trading at the time generating losses for jpmorgan. and to essentially hide losses associated with those positions that were actually greater than they wanted to led on. scott, there will be more details later today. we hear there's a press conference at 2:00 in downtown manhattan. we will be bringing you all the details from that. >> kate kelly, thanks so much. before we go to break, just to tie up what rick was saying. is 270 the danger zone for the rally? stocks seem to be sputters with rates around that level or ab e above. >> i think it's going to make you think that housing is derailed as a major engine. yes. it's really important. rick has been talking over and over about mortgage rates. two-year high. dp you don't want that, affordability really going down in some of the key earnings. >> mortgage aps are down again. >> yes. listen. pay t attention to this. we don't want to lose that prop. we are losing it. >> taper, if people can't even withstand a 2.7 ten-year and a
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mortgage that's still historically lower than it's over been and that throws affordability out the window. >> worried about getting financing. take a pause and get financing later on. >> i think it's darn weak then. come on. >> hey, yeah, i mean, i'm not going to argue with that. i'm not going to argue with that. coming up aol ceo tim armstrong apologizing for his firing heard around the world. keep it here. my mantra?
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first time since january we eclipsed 500 but we didn't quite get there. not yet. 499. >> seven centis away and then backed up. >> seven cents away and then backed down b. >> stock is up huge. >> up huge. >> we're going to have 6 and 60 coming up after this break.
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it's that time. 6 in 60. we haven't even talked about the airline deal. >> stunning. even europe said this was okay. it could be 1,000 different routes. this deal is over. it's over. >> it's going to be a nasty battle. >> done. >> they brought the kitchen
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sink. >> no, done. >> let's move on. we don't have a lot of time. cree. >> this is led. i thought they were having a great quarter. so did everybody else in the world. they said they're gloomier than i thought they would be but at some point, buy it. >> immediaty. >> this is a little guy. mobile media. this just shows you not everybody mobile is going. >> missed again, basically. >> missed again. very high revenue growth. >> barclays, hold to buy on marble. >> i had them on last night. saying store components are doing great. flash is doing great. disk drives. be careful. that's the inside. dell sells us out. >> bby, holy molly. >> increased the price target big. not shopping at macy's. they are buying hard goods. >> stunning. lbo, they thought 16 if they could get it done. >> finally, gardner, q2 smartphone sales. >> microsoft passed blackberry as the number three smartphone. meanwhile, blackberry goes up a
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little bit every day. people feel the patents are worth a great deal. let's talk about what we've got on "mad" tonight -- >> it's a company that has a radical not carpet but targeted anti-cancer. david, we talked, you and i, about these biotechs all the time. this company has done a lot of things right. everybody loves biotech this year. >> great job on this show of highlighting some of these companies. >> they all come on, that's a biotech show. actually it's "mad money." >> 6:00 and 11:00. we've got more, of course, coming up on "squawk on the street" including a bull and, yeah, a bear on apple. join us right after this break. announcer: where can an investor
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suddenly, faraway places don't seem so...far away. ♪ welcome back to "squawk on the street." our road map for this hour starts with macy's. a rare miss for the retail giant. ceo saying consumers are worried about the uncertain economic environment. could it be something bigger though? are we witnessing the fall of the department store? plus, apple getting the icahn boost this morning nearing $100 a share once again.
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is it time for you to buy? we have a bull and a bear to battle it out. forbes is out with the list of the most pin know vative companies in the world. you will be shocked to find out not who made the list but who did not make the cut? we'll bring you the full laist later. we start with macy's reporting in the red. richard is retail analyst with steve full and matthew joins us, retail analyst with jpmorgan. gentlemen, good morning. >> good morning. >> good morning. >> let me kick off with you, richard. i got your note here and it's rare that something -- something really hits you that perhaps hasn't been discussed before. in your note you are suggesting broadly across retail that with cleaner balance sheets, consumers are increasinglying looking to spend money on big-ticket items, homes, cars, hotels, rather than smaller impulse items. is that really true in your view? >> absolutery.
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i think we're seeing evidence of that across the board and i think we will continue to see that through the holiday season. >> so what does that mean for stocks like macy's? >> well, it means macy's has a more challenging fight. assuming apparel sales are essentially flat this second half they're going to have to fight that much harder for market share. we think they're well positioned to win that fight but it's going to be tough. >> you see, matthew, we had actually a hedge fund manager on earlier in the week who is even more dour about what is happening within retail, suggesting if you look at retail growth in this country, retail sales growth, half of it is actually going to the likes of samsung, apple, and amazon and therefore not through the tra additional means such as macy's, would you agree with that? >> i think we saw a shift over the june, july period here in terms of spending as richard talked about with housing and with auto sales strong. clearly, we didn't see the same strength at macy's and i think the other department stores in all of retail is going to show
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the same thing. look, i wouldn't give up hope yet. i think the comments from macy's in their release about august and i think we will hear more about that in 30 minutes on their call. i think that's encouraging. so you know, the question is, do we see a leader back to school in but i don't know that i would give up hope yet on the consumer, therichard, does this macy's may not be capitalizing on jcpenney's paying as much as we thought? >> the customers are very different. the jcpenney customer being price and valued oriented and macy's customer being value but on premium brands. i don't think it flowed to macy's over the last year and we don't think it will be a big impact on this year as well. >> you in your note ren. reiterating the buy and the comments that you made to simon's first or second question, you certainly sound like it's more up for grabs and that it's no guarantee at all
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that macy's is going to be able to get things back on track, that it's going to be tough, i believe, in your words, yet why the reiteration of a buy. it sounds like it's anybody's guess. >> i have an investment thesis that is over a 12-month time horizon that they can leverage their fixed cost basis through sales growth and by being the biggest apparel retailer in america take that strength to the next level to be that much more important to the consumer. >> matthew, can you take us briefly on a quick trip through your universe. where does macy's fit in the other investment choices? >> yeah, we've actually identified four key stocks which we call our four horsemen, macy's, nike, vf corp. and dollar tree. we think those four companies fit the mid teens earnings profile balance sheet. best in class. i would agree with richard. i think what we saw today is a
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sales shortfall but illustrate that algorithm of a strong company, macy's earnings growth, 18% in the spring season here. >> sure. >> i think when you put it all together it's actually wasn't a terrible print and especially as you look forward i think they're well positioned if back to school does come later. >> i was under the impress they brought in fashion earlier because back to school was earlier in some parts of the country. richard, before we let you go, is macy's your top choice for investors? >> today it's my top choice. yes. >> good to see you both. thank you very much. thank you, guys. >> thank you. now speaking of the share that tech may be winning a consumer wallet, let's look at apple here. strayeding near that $500 mark. that's a level we haven't seen since january of this year. 490 -- let's see if it hits 497. $496.99. up 1 1/2%. not a huge move considering the
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disclosure -- or the tweet, should we say, from carl icahn that he's buying shares of this company and pushing tim cook to do, what a to buy back more shares to increase the investor payout? >> the follow through is light. 2% is nothing to sneeze at. yesterday the stock had a very big move. we came season seven cents this morning. the first time we haven't closed above five since january. stocks got a nice bump. now belief that maybe carl, if nothing else, at least at this point, has put a floor on apple. >> you can argue that certainly. very interesting to see what transpires from here, as you pointed out, stock. already got a paper profit of let's call it 6%, 7% on figuring about a billion and a half, somewhere in there. that's a pretty good day's work.
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>> at least it's public. >> that's true. >> interesting. couple of interesting questions. move on to a developing story in alabama. a ups cargo plane with at least two people aboard crashing just outside the airport in birmingham. phil lebeau is live in chicago with details on that? >> it will be some time before inve investigators know what happened. early this morning in birmingham, alabama, a ups plane in route from louisville to birmingham crashed as it was approaching landing. it wasn't landing but it was on approach, killing the pilot and co-pilot. airbus 300-600 in route from louisville to birmingham. a statement by ups says we place the utmost value on the safety of our employees, our customers, and the public. we will immediately engage with the national transportation safety board's investigation, and we will work enhawesively on response efforts. by the way, as you look at shares of ups we should mention
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there is an ntsb go team on its way to alabama. also, u.s. officials are reviewing the cargo on the plane. that's standard. according to a senior counter terrorism official talking with nbc news, there is no indication at this point that there is anything related to the cargo that caused this crash. again, that's very preliminary. here's the ntsb talking about the next step in the investigation. >> the board has very good success rate with being able to recover the recorders. so at this point i'm optimistic that we will be able to recover those. >> so we are going to get on our way and board an airplane. again, we should be in birmingham by noon their time. actually, we should be there by 11:00 their time. we will update you as we find out information. >> again, getting the black box is one of the first steps as they look at exactly what happened with this airbus
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a-300-600 uns cps cargo plane t crashed. scott, one last note. this is the sixth ups cargo crash in recent history. but you've got to go back a ways when you continue all six of those events. so we will be following this and have more throughout the morning. back to you. >> all right, phil, thanks so much. phil lebeau for us in chicago. let's send it over to dominick now for a market flash. first and foremost. welcome to the family. >> it's good to be here, scott. thank you. let's find out what's happening with steinway. moving higher, the shares will be acquired by paulson and company. that topped colbert and company's $35 per share bid. now, he is refusing to match the pulse and offer which means steinway will pay him $56.7 million termination fee. kelly, back over to you. >> all right, dominic, great to see you. suggesting you've had a 80% return on steinway for investors because they abandoned their
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jewel class structure. the question is should other ceos do the same. facebo facebook brings to mind. apple getting the icahn boost after the billionaire investor revealing his large position in the stock. the question is after a $40 increase should you be guying it? the debate is coming up next. later, new list of most vating companies in the world without facebook or tesla at the top? "squawk on the street" returns in two. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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the ceo issish y shoeing an apology. julia boorstin has more on that. >> that's right. aol ceo tim armstrong is apologizing for the way he fired director lentz who was recording an internal conference call last week. in case you haven't heard the clip, here's what he said to able lentz. >> if you think what's going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave house today. the reason is, and i'm going to be very specific about this, is past from an experience -- able, put that camera down right now. able, you're fired. out. >> armstrong took responsibility for the way he handled the firing. saying in a note to employees, quote, it was an emotional response at the start of a difficult discussion dealing with many people's careers and livelihoods. i am the ceo and leader of the
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organization and i take that responsibility seriously. we talk a lot about accountability and i am accountable for the way i handled the situation, and at a human level, it was unfair to abel. i've communicated to him directly and apologized for the way the matter was handled at the meeting. in explaining why he had such an emotional reaction armstrong says in this letter to employees that he's determined to keep internal meetings confidential so employees can speak freely. kelly? >> okay. julia, thanks very much for the latest on that. now, shares of apple are approaching $500 after carl icahn revealed a large position in the company yesterday. icahn tweeted that he spoke with apple ceo tim cook about the possibility of an increased stock buyback. the question now given the rally and shares is what to do with him here. joining us now is an apple shareholder and an apple bear david trainer, ceo of new constructs. good morning. >> good morning. >> timothy, i would ask, why not take profits here but i'm
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curious about what price level you actually got into the shares. >> we've owned the shares for almost a decade now. we have a low-cost basis on the shares. we've owned it since before the iphone existed. we're happy with where things are. if the question, is you know, where would one buy it or where would one sell it, we just think we're looking for a fair valuation for the market which we don't think we're getting right now. >> what is fair value and are you not bothered by -- we've been having this debate for weeks now as to whether apple has lost its magic, lost innovative touch without steve jobs at helm. are you not concerned? >> well, i think there's a few parts to that. one, the product mix they have now are things that were conceived under steve's watch biological weapon expect you probably have a few more years of call it a steve jobs effected apple and tim cook has been running the operation for a long time so we're comfortable with his management of the operation as well. when you ask what a fair valuation is, 12 1/2, we don't
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see why a company with its balance sheet, its growth, earnings shouldn't at least get a market multiple we think there's plenty of room on the upside here even without some crazy new product or a watch or a television. >> david, it appears from the notes this morning that you have a more bearish tone on you're out look for apple. even after carl icahn is in? is that a game changer for a share holder? >> no. i'm positive that carl icahn agrees with my long-term thesis. his strategy to me is short-term oriented. he's looking to get the cash out of the company, getting a quick pop. if i can make stock move by typing in twitter that i owned it. >> but he's not a quick pop guy. >> come on. >> really? >> i think that's his play here. i don't think he would disagree with the long-term thesis. at 500 bucks, the stock price implys a pro pen chul return on
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capital at 50%. that's not possible for a company to do that into perpetuity. p wh when you look at a long term on capital that makes sense, 250, $300 range. >> tim, what's your response to that? >> i think that there's some concern that apple can't maintain the margins that they've had. greater than industry margins for better than, you know, ten years. so i just disagree with the other, you know, the other guests that somehow apple has to participate in lower margin products and kill their margins when they have a premium product that sells at a premium price. >> for someone who sat on this stock for a long time are you prepared to give icahn the crit critic? you buy apple because you believe in innovation, this is the time of year where they innovate and they showed the market what they have. icahn is coming through and talking about who is being -- who is seeing the dividend, boosting the return that vow have to shareholders. we went through this in april of
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last year with another hedge fund manager who took a lot of glory then. spent $16 billion in the second quarter buying back stock as a result of that. the stock ended lower than it was at the beginning of the quarter. i mean, this is a sprooet complete nonsense, isn't it, this trail of activist shareholders from your point of view, inner growth company moaning about dividends. >> i would have to agree with your other guests in that carl icahn taking a position, we won't know what carl icahn's position is until he's long gone from the stock. long-term investor looking at valuation, looking -- we would love to see more cash return to shareholders but not because somebody is making a lot of noise. we would have to say we just want to continue to see apple go down the path where they are. over the last two years they continue to increase that return to shareholders. >> we don't think -- this goes out to both. you don't think at the very least that icahn has put perhaps a floor on this stock?
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>> it might be a short-term floor but i don't think it's a permanent floor. mature and have a lot of cash and essentially he wants to get the cash out of the company and, look, he's not make anything operational changes. no focus there. >> let me say one other thing about margins. i'm not saying that apple's margins are, you know, just a little bit too high. i'm saying they're three, four, five, ten times higher than the industry average, okay? so that's the part that's not sustainable. they're headed down, they're going to get a lot lower. i think they still may be able to maintain a slight edge over the competition but not the four or five times the margins that the other firms have. >> okay. guys, we'll leave it there. tim, david, keep -- tim, quickly on margins? >> well, simon has asked what we thought of carl icahn. you know, these types of people tend to rent the stock for periods of time. long-term investors want to hold it. i just happen to disagree on the margin call. >> for growth. >> thank you very much this
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morning. apple shares as they near that 500. >> why do you think icahn has put a floor under the stock? >> because i think a guy of his heft who comes into the stock is going the perhaps try and shake things up a bit. i think people will view that as a big positive for where the stock goes from there. i'm not suggesting -- >> i think it simply signals the trade is on. he doesn't have to do anything. everybody else will simply follow him in in the belief that that's where the momentum is now. with netflix. >> i think apple -- well, we've got to go. >> okay. >> forbes is out with a list of the most innovative companies in the world. and guess who didn't make the list? we'll reveal that after the break. stay tuned. this is "squawk on the street." right now, 7 years of music is being streamed.
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because what you dont know can hurt you.urance, what if you didn't know that it's smart to replace washing-machine hoses every five years? what if you didn't know that you might need extra coverage for more expensive items? and what if you didn't know that teen drivers are four times more likely to get into an accident? 'sup the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum -bum ♪ welcome back. forbes is out with its list of the 100 most innovative
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companies in the world. it will be featured in the magazine's september issue. you may be surprised when you see who didn't crack the top 50. joining us now with more is bruce, managing editor at "forbes." welcome. >> thank you. >> first of all, who is at the top of the list here? who are the most innovative companies and why? >> for the third year in a role is and alexion, vm wear, a lot of tech, baio tech up top. >> you're looking at specifically at research and development spending levels but what else? >> no, unlike a lot of other innovation lists it's not about patents specifically it's what investors say. we look at the fundamental cash that a company can make from existing business as if it just stopped doing anything new. what investors are paying above that. that's your innovation premium and we rank them by that. >> so a couple of pharma names up there. is that new? is there -- are they moving to the top of the list? >> the ones that have been up there have been up there a while, like alexion.
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things like apple, you know, we saw a huge drop. apple went from 12 to 20s to 70s now. >> that's interesting. the headlines come from the names you don't see up there. where is apple, tesla? >> we need to have public cli available financials of five years and market cap greater than ten billion. so no facebook. >> howe is apple the 70th interest innovator of a company? >> after steve jobs left a lot of investors collapsed their confidence, if you will, in the company's ability to come out with amaze anything things and that's what this list is about. faith that xcompanies will come up with something great. they still might. they still might. >> but by putting them 70th you're buying into the noise and the hype that's been out there, the negative hype that apple somehow has lost its way, lost its edge, can't innovate anymore. >> yeah, i think there is hype out there but the markets are pretty efficient processor of pricing information. and the future.
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and what else can you -- >> i don't want to sit around with a bunch of editors picking favorites. >> with a case of a company like apple you almost by definition don't really know what they're going to come out with. >> right. >> how can you officially price it? i mean, it's -- it's momentum. >> millions and millions of people are making those guesses. >> it's not momentum, it's a statement on what the market is of momentum, not an accurate reflection of pipeline. >> we look at five years of trailing data to field the fundamental so it's based on track record. apple has done a great job. it might come back. it's still in top 100. elite. >> as a tech company you might expect it to be somewhere on the list. >> but things like philips is not or sony is not, samsung is not. also an innovative company. >> it is encouraging a lot of u.s. names at the top. does that tell you something about the innovation coming out of the snus. >> u.s. is second to none when it comes to innovation. northern california, amazing
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hub. great p gre greata tent laws that keep them on the shores. a lot of innovative companies in food and beverage on the list. >> where is samsung ranked? >> not on there. >> it's not top 100 innovator? >> no. we stop at 100. we looked at the worst, the biggest discounts and you had companies like intel and johnson & johnson. great companies but investors don't believe in them. >> that's for sure. some confirmation from that and analysts notes this morning. you can read more about it in the issue of "forbes." >> where is google on the list? >> 27th. >> that tells you something. >> dropped a little bit. it's best of the best. >> rush out and buy copies. >> it's not a stock pickers' list. >> it's not where the premiums are. >> it seems to be one of the primary innovators in the entire technology space. >> it's not priced for that so it's not on a list. it's a bit like heading into the nightclub, if your name is not on the list, you're not getting? >> that's true. >> if you say so.
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up next, we have breaking news on crude oil inventories. find out what that could mean for prices at the pump. later, could the justice department's move, merger end up creating the same outcome the agency was hoping to avoid? ♪ the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better,
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welcome back to "squawk on the street." i'm bertha coombs at the nymex. we have a much bigger than expected draw when it kams to
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crude and gasoline. crude stockpiles down 2.8 million barrels. that was well ahead of the expectation of a drawdown of 1.5 million analysts surveyed by plaks had expected. also gasoline is the big surprise. we actually saw a drawdown in gasoline of over a million barrels. that contrasts with what we heard from the industry yesterday. there was some kerch that we were seeing the end of the season and seeing a build-up in gasoline. as far as curbing supplies, once again, cushing down 1.4 million bears. cushing, oklahoma, of course, the delivery hub of nymex crude. at the moment, nymex crude coming up a little bit from where it was ahead of the number but we are seeing a rally here in gasoline. we're also seeing strength, guys, in natgas as we're expecting to see warmer weather here at the end of the august. back to you. >> thanks so much. >> bertha coombs, thank you very much. breaking news in the jpmorgan, scott cone is joining
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us now. >> widely rumored, now it's true. they've cut a deal. non-prosecution agreement with the u.s. justice department which means he is not going to be prosecuted for the $6 billion plus in loss necessary that derivatives portfolio but he is going to cooperate with the government. and this comes on the same day that the u.s. attorney's office in manhattan, as we reported, has unsealed charges against two derivative traders at jpmorgan chase for allegedly concealing the extent of those losses. the u.s. attorney has scheduled a news conference for 2:00 p.m. eastern time. we will keep you posted on all of that. back to you. >> so, scott, i guess it appears that, you know, from kate kelly's earliest reporting on this story that this gentleman, the two most senior folks involved in this, or at least two of the more senior people are going to skip charges.
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>> it appears that way, as long as they cooperate. and, of course, in the non-prosecution agreement, and this is kind of boilerplate, if they find something in the course of that investigation that implicates iksil they can go back and charge him. for now he's going to cooperate. the issue seems to be separative between the losses which were lo massive and where they were covered up. they are charged with covering up the extent of those $6 billion in losses. >> all right. scott, thanks. okay. let's take a closer look at the markets now. the dow, s&p, and nasdaq are all in negative territory. we continue to drift down from the record highs, of course, that we struck earlier in the summer. let's get zone some analysis about what you should do now for the second half of the year. steven wood is chief market strategist with russell investments and alan lance joins us, editor of the "lance letter." gentleman, good morning to you. let me kickoff with you. over the last 24, 48 hours we've
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had a shock sell-off in the bond market. it's driven the yield on the ten year up maybe 12, 13 points. that's a big move. >> it is. >> why is that happening and why is this stock market more -- not more effected by it? >> i think the market had run hard and appropriately so if you look at a lot of -- equity markets. correct. there was a radical movement coming post-bernanke's speech on may 22nd. there was the taperitis, the taper t er tangent, whatever. but there was a spike in interest rates. but that spike came from looking at fed policy. this is very different from 1994 in the fact that that spike in rates was given by fears of inflation and a very aggressive fed. this is very, very different. so we're calling this more of a yield norm algization process. >> good. the yield to r. going out because we believed in growth. >> we believe that growth is stabilizing in a modest if not great pathway. we believe the fed will begin to dial back some of the stimulus but that is not the same thing as having an inflation scare
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drive yields up. one is more controlled. the other one is less controlled. this is somewhat dissimilar to 1994. >> yield ksz s can go up and th stock market can go up at the same time. >> yes. if it's a function of health it's not nearly as bad. >> alan, is he correct? >> yeah, definitely. i think, you know, it's the reason interest rates go up. and it's a situation where, you know, there's many parts of the market, simon, that, you know, are getting fully valued, you know, you look at health care, consumer discretionary. you know, financials. up 25%, 30%. you know, so some profit taking is in order. but on the other hand, you know, there are some, you know, great bargains still out there. investors are very forgetful and fickle. i think a disciplined investor just has to take advantage of it. eventually people will lose money in their bond funds and that money has to go somewhere. most of it is going in cash now but erchtd chully, you know that might even bring back to the equity markets any kind of
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increase in interest rates as long like he said as it's controlled, you know, might even be favorable or conducive to higher equity rk quitity valuat >> i'm sure your focus here is on the united states but i think it's imperative to people that facts abroad to make their own decision. >> sure. >> in fact, the french economy and german xhi xeconomy grew mo rapidly than the u.s. economy president if you look at the merrill lynch survey released, professional investors are increasing the overweight in europe and will over the next year, they say, have a greater overweight on europe than they do on u.s. equities. do you think the people at home now should be diversifying into european equities? >> it's good to see the market come into the position we've held for some time now. if you look at europe there's a bottom in process and we think they have probably bottomed if you look in the northern countries. the southern country, different story. it's going to be years in some
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cases depressionary conditions. looking at europe, bev been liking equities around specific names and europe, the value vas are attractive. strong balance sheets. >> do you think people watching now will be able to assimilate that and buy that? >> work with the professionals. actively managed. so managing the europe systemic risk and allowing stock picking to get some good securities sand good valuations that's how an m? >> to your earlier point, i think people are are underestimating the taper. i think the market is tell you over these last several days where we ended if six weeks of gains and clearly as rates rise, having a bit of an issue with stocks which seem to be sputtering. i don't think the market is yet ready to accept the fact that the fed is going to pull away even a little bit. i think initially there's going to be a tantrum. i'm not saying long term or
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whatever that that's going to be an issue but if you put that together with the fact that stocks are up so substantially this year, what is the impetus for people to remain in the market given all of those factors? >> dp ywe think the market is g to be up a little bit between now and the end of the year with volatility. we don't think it's going to be great. but that's why you look at stock picking, security selection. correlations are coming down. stocks are behaving differently. you need to have good active management i discerning between those companies that can out perform in a revenue senselengi. i think the fed is going to be more data dependent. people might suspect. even the hawks and fed do not think inflation is too high. that's an important point. >> alan, we're out of time. seems only fair to give you one last comment there. >> yeah, you know, i totally agree. you look at apple. we sold some at 700 in september. a couple of months ago everybody hated it and we started buying again at 400. so i think, you know, take advantage of those moves spop
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steve's right. it's a situation where, you know, take advantage of the market fickleness. there's a lot of good quality companies. a year ago we were buying xerox and dole and dell and look what's happened to all three of those. take profits along the way as the markets move up. >> alan, i know we've got to run but you said you've been buying apple. icahn is now in the stock. are you more comfortable now than you were two days ago with apple? >> not really. it's a fundamental story whether icahn is in or not. i don't think in a company that size there's going to be a factor. but our buy limit, scott, was 429. so we're not buying it here. haven't bought it in the last few weeks. we're buying a lot as it went belb be429, and below 400. again, everything is condensed. it's back to 500. i thought that would be a year move with a 3.6% dividend. turns out it's a few months. >> yeah, sure. guys, we're going to leave it
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there. thank you. we all run through where europeans for those that were listening. europe close. thanks, guys. >> all right. let's send it over to dominic shu now. >> cree is falling after analysts and estimates here. earlier today it matched estimates with 38 cents a share. that's excluding certain items. cree is a maker of lighting equipment, leds, light emmitting diodes. watch the preshares, killy. >> thank you, sir. the american/us airways merger in jeopardy. up next, the pilot and union official about what the move means for him and for customers. we'll be right back. stay with us. shark week may be over but chart week is just flexing its fins. cramer's diving in to find you stocks you can sink your teeth into and spotting the dangerous
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predators you need to avoid. it's chart week on "mad money." geoff: i'm the kind of guy who doesn't like being sold to. the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.
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welcome back. the justice department filing a lawsuit seeking to block the planned merger of american airlines and us airways because of concerns that travelers would have to pay millions more for fares and fees. amp on the pearson is live at reagan national airport with latest there. hampton? >> how are you doing, scott? yeah, it's the morning after the justice department moved, if you will, to try and ground the proposed american-u.s. air merger. we're here at reagan national airport because american and u.s. air, between the two of them, control something like 69% of the takeoff and landing spots here, something like 63% of all the non-stop flights in and out of this airport. but in random conversations with travelers, we found, frankly, not a whole lot of awareness of what the consequences are, for the airline industry or,
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frankly, for consumers as travelers. we did, however, find a fair apartment of amount of awareness about american airlines bankrupt problems. >> probably one of them will be bankrupt. you know, because, you know, there's still a lot of competition from people like delta, spirit, blue. >> i think a merger would, you know increase routes and maybe it would be a good thing in the long run, certainly for american, you know, they declared bankruptcy. >> you might lose the air miles that many were non-ending before and now they may end and you may have to use them by a period of time, according to who they merge with. you could use some of the number of planes that fly to different areas. >> now, travel evers we talked to get a lot more animated when you talk to them about higher fares, higher fees, and the lack of not enough flights to their favorite destinations. they don't, however, seem to connect all of that to the mega
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merger airline environment we've been is n. since starting back in 2008. and by the way, both the attorneys general for virginia and the district of columbia have signed on to that justice department lawsuit, along with texas and arizona. the home states respectively for american and u.s. air. so we will now see what happens next as far as what looks like a looming court battle. kelly, back to you. >> hampton, thanks very much. i believe we will be speaking with arizona on this issue a little bit later on the program. i will let you g from now and bring in first officer tom, american airlines pilot and communication chairman for the allied pile t lots association which is the pilot's union for american airlines. thanks for joining us. >> good morning. >> so what's the pilots' perspective on this? were you as surprised on the street yesterday when the doj said they were going to block this deal? >> we believe justice is unfairly singled us out and is attempting to impose a double standard on our attempt to merge
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with us airways. it doesn't make sense. >> what do you think is behind the decision? >> you know, we really don't know. we had some issues regarding slot divestitures at washington, reagan. they can bly out of dulles or you've got market dominance by southwest and united. there are plenty of travel options. if that's the issue, we believe that there's a resolution. >> tom, just to quote "the journal" on this this morning they're saying, look, the challenge from the do jorks could throw a wrench into americans' plans to emerge from bankruptcy for protection because this merger was the basis of the bankruptcy exit plan. the two airlines were hoping for washington's blessing ahead of a court hear for thursday to confirm the exit plan. so where does this leave the pilots, where does this leave american now? >> well, in a sense, we're in a position awaiting for the trial date which we anticipate will be scheduled in the next several months. in the interim we're going to bargain with doj and compromise on this issue.
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we've been long-term supporters for this merger. it's a good fit for both carriers. it's going to add competition in the marketplace. doj facilitated and supportered the mergers between delta and northwest and united and continental. why they are attempting to roadblock this right now is just unfathomable. in order for us to compete with those two mega carriers we've got to have the critical mass to do so. and we obtained that critical mass by mergering with us airways. >> it may be that they regret having approved those deals and looking at the pricing for the routes in question and what consolidation has done there. you say unfathomable and doptn' understand. why is that, they are trying to block a merger that they say has the likelihood of stifles competition and therefore raising prices and fees? >> we simply don't agree with it. the cat's out of the bag on consolidation here. you've got what is in effect two carriers that are now in the process of carving up the domestic and international marketplace.
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if you want a third viable competitor in it it's going to take the form of an american and us airways combination. there really is no alternative to that. >> it may seem grossly unfair from their point of view they are not going to let happen to american that has happened to these. there are other people watching the industry and "the new york times" makes this point today that would say auk chactually t airline industry is uncompetitive. you raise prices, do international deals. you know, keep passengers through frequent flier miles. it's one of the most uncompetitive industries around and still trades at very low margins. it isn't an industry that has competition blowing through it in the way that it should have. they would say. >> i would vehemently disagree. this combination with american and us airways would offer our passengers a great deal more options in terms of travel and would allow us to compete on a level playing field with the recently merged delta, northwest, and
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united/continental. it's cheaper to travel now than it was in don draper's day. >> what happens to american is in fact you guys are not able to win in court and the deal is blocked? what happens to the airline in which you're a part? >> well, we're back at square l option, and u.s. airways is in pretty much the same picture. what we don't want to do is seen these two respective carriers wither on the vine in the shadow of the two remaining mega carriers. we believe it's in the best interests of our shareholders, employees, and customers to execute this merger and sooner rather than later. >> thanks very much for your perspective this morning. >> thank you. still ahead on the program, the full season is slated to come a little earlier than usual this year. we'll find out why a chilly fall could mean a very hot back to school shopping season. we're back after a quick break. ♪
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having bucked the down trend yesterday, we're heading in a negative direction again today as you can see. johnson & johnson, home depot, and boeing leading us lower.
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let's get to rick santelli in chicago. >> thanks, simon. you know, i found some very interesting information on the fitch website today, and it was about etfs, specifically corporate etfs, you know, high yield, investment grade, but what's interesting about this is that the federal reserve bank of new york has allowed fitch and many analysts and economists and strategists out there, they have a much more granular look at things like dealer inventories in corporates and etfs and their huge growth cycle. why is any of this important? let's put it in context. the corporate bond market in the u.s. is probably a $9 trillion market, and what i'm about to show you with these etfs represents slightly less than 2% of that market. so they're not overtaking the actual securities market, but think dodd/frank and all the issues that affect primary dealers and even more so just
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anybody that has an inventory in corporate securities, and the issue is simple. they're going to hold less. they're going to participate less. they're not getting involved in balance sheets, set aside capital, haircuts, all of that. it's going to be less. we've talked about how that could make the markets a little bill mo bit more volatile. we've taken some shock absorbers off. investment grade etfs, the five largest, well, they had about 6 $46 billion roughly in assets. deal eer inventory, about $9 billion. so what we've seen is dealer inventories are going down and most likely that trend isn't going to change anytime soon, and etfs -- now, this isn't a negative assessment or a positive assessment. what it means according to fitch is if you get redemptions or you get these markets moving where there's a liquidation of $250
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million or so, you're going to see a boat load of movement, something to pay attention to. the other big news of the day, of course, is europe. after six quarters aggregate eurozone gdp was positive. forget in the old days more than four quarters was called a depression. i don't know that anybody called it a depression, and one positive number isn't going to necessarily change everybody's minds but let's be real here, it's wonderful news. now the issue is dealing with the structural issues that have been avoided so even in europe time heals some wounds. the real issue is who is going to haeal the unemployment wound? scotty, back to you. >> thank you so much. many of us are watching apple. we have someone who says cisco's report tonight will be a key indicator for the sector and we'll explain why coming up. (announcer) scottrade knows our clients trade
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welcome back. we're taking a look at shares of apple. they're up about 1.6%. scott, i know we have to let you go so you can prepare for your show. are you guys going to be debating apple again, whether to get in at these levels. whether icahn's buy is establishing a floor? >> we'll definitely discuss the stock. see if it hits $500. we'll also talk with a top executive of pandora as you look
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at the growing competition on pandora from people like apple, spotify, google, and everyone else and we'll talk about the impact of the market. >> the leg down we've taken, it's not like that's coincided with a move higher in the ten-year. we're down to about 2.7%. >> maybe 2.7% is the psychological level. >> certainly was yesterday. >> don't forget cisco reports tonight which increasingly people believe is the bellwether for capital expenditure. >> we'll trade ahead of that as well clearly. >> we might squeeze it in the next hour of this show. >> i'm sure you will. >> thanks very much. here is what you might have missed if you're just tuning into us on "squawk on the street." welcome to "squawk on the street." here is what's happened so far. >> we've gone through two years since steve jobs passed, right? almost two years in october. so this realization has now set
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in. and this is kind of the inflection point for apple. it's now just a stock. it is no longer -- >> macy's earnings that are out, they're weaker than expected. macy's in with earnings of 72 cents a share. street was looking for 87 cen-- cents. >> my first take away wasn't how disappointing, what are the numbers going to be at jcpenney's if macy's is this bad? >> here we go. >> it's one thing when david einhorn comes down the road with a stick. carl has the biggest stick on the block. if carl wants to shake you up, carl doesn't care, he's going to shake you up. >> you know, the question is do we see a later back to school? but i don't know that i would give up hope yet on the consumer, the department stores, and all of retail. >> the product mix they have now are things that were conceived under steve's watch. we expect you probably have a few more years of call it a
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steve jobs effect at apple. >> u.s. is second to none when it comes to innovation. we have northern california, great patent laws that keep pharma companies on these shores, and we have an amazingly wealthy middle class that can buy packaged goods. and a very good morning to you. we're live at post 9 at the new york stock exchange. let's get a quick check on the markets. negative territory and just edging lower as you can see, down 93 on the dow. earning season at an end. a lot of people focused on what the fed will do some september and big moves this week in the bond market. shares of brocade surging. the third quarter profits more than doubled after a $76 million gain from a litigation settlement. third quarter revenue at brocade was down year-over-year but earnings beat on the top and the bottom line better than analysts were expecting.
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me meanwhile, shares of seaworld are sinking. seaworld says the loss is related to expenses from its initial ipo. the company lowering its revenue outlook for the rest of the year. >> here is a look at the road map. a tough day for macy's as the retailer misses on earnings for first time since 2007. we'll tell you if this is the start of a trend or just a blip for this retailer coming up. and in a surprise move, the department of justice and several states are suing to block the merger between amr and us airways. we'll talk to the attorney general of arizona to find out why he thinks this merger is a bad idea. and shocking pictures out of egypt this morning where dozens of people have been killed after clashes between security forces and supporters of former president mohamed morsi. we'll go live on the ground in cairo for the latest. >> let's kick it off with steve liesman back at headquarters with some breaking news. steve? >> simon, thanks. the new york fed reporting that consumer credit improved in the second quarter.
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deling quen sis falling to 7.6% of all loans. consumers continue to shed debt but in a sign americans are still cautious, demand for credit is still weak. here are the numbers. mortgage debt falling by 1.1%. revolving credit declining. auto loan, credit cards, and student loans are up. the total also declined by 0.7%. now, for the first time that i could find since the beginning of the data, which goes back to 2003, delinquencies declined in every single category. you cannot find negative numbers for delinquencies, these are 90-plus days delinquent for all credit going back to 2003. so that's a sign that things are improving. how about some perspective here? take a look at how things looked into the best of days. 2005. we're upwards of 95% of all debt was current. then you could look at the worst of days. in 2009, when it was down below -- just below 85%, and now
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you can see we're creeping back up with improvements of the percent of all loans that are current and a decline of all loans that are late. there was a rise in bankruptcy filings and foreclosures. that appears to be maybe somewhat seasonally related, but it does bear watching. one of the negative reports, guys, a measure of demand for consumer credit was flat. that's a sign consumers are still repairing their balance sheets and don't feel comfortable enough to take on new debt and spend. that's a short-term negative, guys, but maybe long-term that's a positive. >> steve, i just want to tag one thing onto what you're saying today for people who are just tuning in. what we've learned this morning, this is from a note from stifel nicolaus, that people are using that clean balance sheet now, they believe, to help funding big ticket items, spending on big ticket items like homes, hotels, and cars rather than discretionary items, and that is one reason, they say, why macy's has missed on results. >> that's a neat way of tying two interesting news stories
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from today. the macy's numbers come amid a challenging time for the consumers dealing with that tax hike that happened at the beginning of the year, but also incomes have been relatively flat and it seems like to the extent that consumers have some money, they repair their debt, but they also seem to be spending more on big ticket stuff where, by the way, auto lending is one of the few categories, simon, that's back to its prior prerecessionary days. >> absolutely. thanks, steve. >> sure. now we turn to more on the developing story out of alabama where two people are dead after a ups cargo plane crashed outside the parent in birmingham. fi phil lebeau joins us. >> investigators are just arr e arriving in birmingham and within the next hour they will be at the crash scene. when they get there, this is what they will see. a plane that has been severed into a couple pieces still smolder in some areas, particularly by the tail of the plane. the u.p.s. flight killed two,
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the pilot and co-pilot. once the investigators get there, one of the things they'll be doing is reviewing the cargo list. it was quite the scene when this plane crashed early this morning just before 6:00 a.m. eastern time. the plane involved here is an airbus a-300-600. it was delivered ten years ago, had about 11,000 flight hours and the flight was en route between louisville and birmingham when it crashed. take a look at the fleet of u.p.s. and how many planes it has, how many it flies around the world, and how many incidents there have been. they own 235 planes. they lease or charter another 293. they make 1,931 daily flights and according to the aviation safety data network, this is the sixth accident or incident for u.p.s. u.p.s. says two of those are hard landings but clearly a developing story as you take a look at shares down franctionaly today, but the bottom line is we're still early in the stages of this investigation.
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kelly and simon, back to you. >> thank you very much. let's get to some corporate news. it was a surprising miss for macy's this morning sending the shares around 4%. the last time they missed on their earnings figure was way back in 2007. many retailers are struggling to attract consumers to their stores and that brings us to the question of the department store model. is it dying? let's bring in robert lewis, ceo of the robin report and the co-author of "the new rules of retail." he was formerly at goldman sachs where he launched a consulting retail practice. and evan clark joins us, the business editor for "women's wear daily." thank you for joining us. >> thank you. >> evan, i like terry lundgren. he's a great ceo at the head of macy's. let's deal specifically with what they're saying today. it's fascinating the way the negatives are said to come externally, cold spring, and
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they take credit for the positives like bringing in the new fashions early because back to school may be earlier, spending a lot more on marketing. evan, what is your commentary on the quarter? what is macy's doing wrong? >> well, i think retail is a very difficult business where there's a lot of things to balance, and season in and season out you've got to be right all the time. i'm not -- it's hard to tell for any particular season what went on, but i don't think the death of the department store is something, you know, that is happening right now. i think macy's has been strong. this is first miss in 25 quarters. and i think that they've said that the back-to-school season was starting off strong. so it seems to be a blip on the radar, but they were supposed to be the bright spot of the second quarter earnings season here for retailers. so i guess we'll have to see what comes. >> is it fair to say in the absence of a compelling fashion trend, they are flailing around a little bit, all of them flail around? >> certainly. if you don't -- what we're seeing with consumers today
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where they're being very careful with their dollars given everything from unemployment to incomes is that they're being choosey, and they go to the stores that give them what they want, and they buy the fashions that they want. so if you miss it, they're very unforgiving for retailers. >> robin, you say this is probably going to be bittersweet for jcpenney perhaps pointing to an opportunity that they could have taken here if they weren't distracted by management issues? >> well, i think that the jcpenney issue, of course, is quite a bit different from what's going on at macy's. jcpenney is not positioned, in my opinion, as a direct competitor to a macy's. macy's has had tremendous success in bringing in more contemporary brands, building an exciteding shopping experience. a lot of things that ron johnson was trying to do at jcpenney in terms of his overall vision,
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which he, unfortunately, in his implementation was not able to control -- >> you're saying this is not -- what's happening at macy's is not reflective of a broader problem for retail. it's macy specifically? >> yes, i think this is a speed bump for macy's, but if it's a speed bump for macy's, it's going to be a speed bump for the rest of these guys who are going to be coming out with earnings reports over the next week or two. yes, i think it is across the retail sector. i think the consumer has been, you know, mumbling, kind of trudging -- >> so it's not macy specific. you're saying it's a broader consumer retail problem. >> i think it is. >> you know, robin, we had david berman on the other day who is a hedge fund manager who invests solely in retail, and he was making the point that actually the retail growth that we're getting at the moment is going -- half of it is going to apple, samsung, and amazon, and, therefore, it will be a horrible
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earnings season for a lot of these department stores, that traditional retail is having a real hard time behind the figures. would you agree with that? >> i think it's a major factor. i think that will continue, the online business will continue to accelerate and take great share away from physical stores, but the physical stores are not going to go away. i do think a lot of the money is going to the internet, but i also think as somebody said earlier, a lot of the disposable income is going towards big ticket items right now as well because the housing situation is recovering. but there is always going to be room for physical stores, what they need to do, however, and which macy's and bloomingdale's are doing quite well, is they have to give the shopper compelling reason to tear themselves away from the internet to go to that store. so they're elevating the shopping experience. >> arguably that was what done johnson was trying to do at jcpenney. guys, with he have to leave it
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there. ron johnson. thank you both for joining us. evan clark and robin lewis. thank you. >> thank you. well, there's already a chill outside, and the question now is whether cold weather could actually be a saving grace for the back-to-school season given the broader tough retail environment that's out there right now. courtney reagan back at hq with more on this. >> good morning. it's been a cool summer for many regions of the country, especially us in new york. while we all sort of roll our eyes when retailers say weather for poor sales there is some validity to the reason. retailers have reported weak summer sales. that could partially explain the lack of enthusiasm for shoppers. it's hard to sell swimsuits when you have goose bumps from the cool air. the good news though for retailers, the cool weather now and forecasts ahead could spur sales of the fall merchandise. so the weather channel's forecast this fall, the weather will be more typical than what we saw last year when it was relatively warm, remember, an extension of the hottest summer
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in 110 years? a normal fall will be welcome news for the gap, macy's and kohl's. today macy's noting early strength for back to school in children's ware and other apparel. >> i think it does drive a mindset towards back to school, and i think it will actually be beneficial to back-to-school sales even though back-to-school sales aren't directly weather impacted. >> it's all about that sentiment. kohl's might especially need a cool fall. morgan stanley and mkm partners expect to see a negative weather impact show up in kohl's earnings report. back to you. >> courtney, thank you very much. courtney reagan there as we get ready for back to school. huge news for the airline industry in the last 24 hours. the department of justice suing to block the merger between amr, american airlines, and us
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airways. we'll talk to somebody directly involved in that lawsuit in a moment. first, rick santelli working on the next edition of "the santelli exchange." rickster. >> yeah, simon. we're going to bring our muni guy back. yesterday the department of justice put the kibosh on a merger and our muni guys. in 7 1/2 minutes we'll talk to new jersey, illinois, and detroit. you don't want to miss this one. - tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550 and schwab really helps me step up my trading. tdd#: 1-800-345-2550 they've now put their most powerful platform, tdd#: 1-800-345-2550 streetsmart edge, in the cloud. tdd#: 1-800-345-2550 so i can use it on the web, where i trade from tdd#: 1-800-345-2550 most of the time. tdd#: 1-800-345-2550 which means i get schwab's most advanced tools tdd#: 1-800-345-2550 on whatever computer i'm on. tdd#: 1-800-345-2550 it's really taken my trading to the next level. tdd#: 1-800-345-2550 i've also got a dedicated team of schwab trading specialists. tdd#: 1-800-345-2550
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welcome back. the u.s. airways/american airlines merger is in jeopardy after the justice department filed an antitrust lawsuit against the plan. six state attorneys general and the district of columbia are joining the doj. one of those attorneys general is tom horn, attorney general for arizona. mr. attorney general, good morning. >> good to be with you. i watch you almost every morning so it's an honor to be with you. >> thanks very much. then you saw the reaction yesterday to the news. a lot of people here and a lot of the people in the industry shaking their heads and saying we don't understand why because american airlines, by the way, is still working through bankruptcy court. if this doesn't go through do they have a real chance of coming back? >> well, they just made something like a $5 billion profit, so it looks like they're going to be doing very well, and their plan to come out of bankruptcy was to expand, to compete, but if they merge and you have an oligopoly of four r ier carriers, then the ten dden
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would be to pull back. ever since 1776 when adam smith wrote "wealth of nations" we've known the more suppliers you have, the more competition you have, prices go down, and service goes up. and when the market consolidates and you have only a few suppliers, then prices go up and service goes down. >> can i ask, what is the arizona specific concern here? >> the dominant concern is the same as the rest of the country, that the national market should not be dominated by only four carriers. you know, really the specific market that's applicable is a given route. so we might say there are four carriers nationally but on a given route there may be only one or two. if they have that monopoly power you will see prices go up. historically we have seen routes served by one or two carriers
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with fares a lot higher. >> why wait until now to come forward with this -- with these kern concerns? >> investigation and decisions on something as complex as an antitrust case take time. but the problem that we've had, i think all of your viewers have seen prices go up, baggage fees go up, as there's been consolidation and that consolidation probably should not have been permitted in the first place. >> wait a minute, you're saying there should -- look, sir, the problem is this is a private enterprise. so if the government is not willing to backstop the airlines in order to keep prices down for the consumers, then in order to get profitable, what they're saying is we had to go from ten in 2000 to maybe four in 2013. unfortunately, you can't have it both ways. >> well, no, i don't think the government should back anybody, but it has been a traditional
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government role to enforce antitrust laws. those are part of basic economic theory in order to have a flourishing free market, you have got to have competition. you can't have monopoly or oligopoly and have a good free market. so the role for government is to be sure we have a free market, that we have competition. the government should not -- >> mr. attorney general -- >> let me just say the consolidations were allowed because they expected competition from low-cost carriers, but now many of those have been acquired or have gone out of business, and so that theory didn't work. and we need to be sure we have as many carriers as we can so we have competition in the market and not a market dominated by a monopoly -- >> i think for many people -- we're out of time but i want to get this in. i think for many people it seems cruel and unfair to the shareholders of american or certainly for us airways which is based in your patch that you have allowed the others, delta, northwest, united, continental, southwest air trans to go
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through. you have allowed them to bulk up and be powerful in the marketplace and now the other two you could potentially prevent from doing the same. that seems very unfair to those who have equity stakes in those businesses. why should they be treated differently? >> well, i think that the permission that was given for the consolidations was a mistake. we need many more carriers in order to have competition, not an oligopoly of four carriers dominating 87% of the marketplace. that's not good economic theory and it's not good in practice and i think your viewers have seen that the prices have gone up and more fees have gone as the industry has consolidated. >> if it was a mistake, which you just said to me, it was a mistake to -- you're an attorney general, you're saying it's a mistake that the other deals went through, don't you have to have an all encompassing collusion for the industry rather than simply punishing these two businesses? >> nobody is being -- nobody is
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wanting to punish anybody. i love my hometown airline and i choose them whenever i can, whenever i have to fly some place. but my job is to enforce the antitrust laws. the antitrust laws were passed because of classic economic theory. we're not pushing the edge of the envelope here. four carriers dominating 87% of the market and many routes which is the applicable market only one or two carriers is not a good free enterprise system. that's what you had when russia went off of communism, they deregulated prices, but they didn't foster competition so their prices went through the stratosphere. you can see in practicality that whenever you have a system where you don't have enough suppliers to have competition, the prices go up and the service goes down. that's not good for the capitalist system. the capitalist systems relies -- >> but the capitalist systems was also weeding these airplanes out. mr. attorney general, we have to leave it there. an important issue we will continue to follow. thank you for joining us with
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your input. tom horne, attorney general for arizona, one of the states suing to block the american airlines merger. >> thank you. it's good to be with you. >> a scary scene in egypt. dozens of people killed after slashes between the army and supporters of the ousted president mohamed morsi. we'll bring you the latest on the ground in cairo in just a few minutes. before global opportunities were part of their investment strategy...
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welcome back to "squawk on the street" and welcome back fabian from muni market advisers. thanks for taking the time today, matt. >> no problem. >> i guess where i'd like to start is steve liesman had an interesting report from the fed on credit, consumer credit, and default rates are falling. in your most recent pieces, you've also talked about falling default rates, but from the muni perspective. tell us about that. >> for sure. i mean, we are seeing current -- the rate -- if you're counting
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up the number of bonds that are defaulting for the first time, meaning not continuing to default year after year, we're at roughly half the rate of what we had yesterday and end of the year before. so, i mean, the effect of the recession, you know, that put a lot of pressure on these smaller and weaker credits is really beginning to abate. so we're at probably the lowest year-to-date number of defaults that we've seen since we started surveying issuers. >> you know, now, let's switch gears. when we all look towards detroit or think of some of the chapter 9 bankruptcies in california and other spots around the nation, it certainly doesn't seem very easy to understand those default sliding. let's separate out detroit. is detroit teaching us anything? is there a prognosis for detroit? is there anything to be learned by muni investors based on the horrible detroit experience? >> well, i mean, detroit, i think that what it shows is obvious situations are, you know, an obvious thing to avoid.
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situations like detroit which has been coming for 50 years is really in the end an actual problem for the market. you know, it could have other effects. i think the governor's plan with respect to detroit is to set some kind of precedent to induce other cities in the state to file. i don't think that that's actually going to happen. filing for bankruptcy is probably one of the very worst things that can happen to a city. so it's hard to see. i've talked to a bunch of mayors. it's hard to see other cities and mayors wanting to follow detroit. nobody wants to be detroit, but as an investor, it just makes you think a little more clearly about what exactly it is you're buying and the kind of situation you are getting yourself into. >> all right. let's now jump into my own backyard. you know, the mayor, mr. emmanuel, is going to have some issues. many believe he's going to have a billion dollar deficit gap to close, but if you look at illinois in the macro sense, they have $100 billion underfunded pension, the governor has stopped paying
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legislators until they come up with a solution. what's your prognosis for illinois paper in the muni land. >> illinois -- i mean, the overall pension funding problem is an issue, but worse is their inability to really address it. and, you know, that's coming right up against a new system of accounting and also a more systematic approach towards pensions in the investment community. so, you know, you have a city like chicago which for a long time was given a pass because it's a big, healthy city otherwise, but it had poor pension funding issues. that pass is no longer applicable. you'll see more cities like chicago and illinois lose their double-a ratings, sort of that pass and being judged more critically about their pensions. it should in theory put more pressure on policymakers to do something, and doing anything, nick at all will help the value of those bonds tremendously. investors are just looking for some kind of willingness momentum. >> well, thanks, matt. you put it in perspective. i guess now, you know, they just pay these guys to show up, but
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it seems as though no paycheck, maybe it will make a difference, maybe it won't. thanks for taking the time. kelly, back to you. >> it's an important theme. rick santelli, thank you very much this morning. now we turn to egypt where things are getting worse. dozens of people have been killed this morning. this after security forces launched a raid to clear protest camps of supporters of ousted president mohamed morsi. we're joined live from sigh r cairo with the latest. >> what many feared would happen did eventually materialize after several attempts to resolve the political deadlock between supporters of ousted president mohamed morsi and the interim government. now the security forces making the move even though it seemed they were reluctant to the very last minute in the early hours of this morning. now, there were two squares that they were hoping to clear. one of them two miles out from here in that direction has been cleared successfully and is in control of the military and the police. the other square is more
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complicated. it's larger. there are more people there. and the clashes are still under way. here is the takeaway. other clashes are also under way in different parts of the city and not just in the city, across the community in alexandria, in suez. it has forced the government to announce a state of emergency that will last for a month and a curfew that starts at 7:00 p.m. local time and ends at 6:00 a.m. in the morning. it's a dramatic set of developments and has serious ramifications. on military assistance, we understand just a few comments were made in that regard a few minutes ago, and also perhaps on an economic front. that's interesting because we had this whole story about the exchange, the stock exchange closing two years ago. that could probably be another real possibility because now we understand that the central bank has ordered the commercial banks not to open tomorrow for security reasons, and as a result, the stock exchange
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cannot operate tomorrow. so they will remain shut on thursday. also interesting to note, over the last seven or eight trading sessions, we've seen a rally but now we have to wait until the exchange opens to really see how investors feel about the latest escalation in violence. kelly? >> yousef, thanks very much for that. the death toll may be upwards ever 95. >> as apple moves towards $500 a share, we've got someone on next who says cisco is actually the best indicator for technology moving forward. of course, cisco reports tonight. he'll explain why. that's next. and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. ♪ (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login...
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to go the distance with you. go long. the european markets are closing now. >> and it is a historic day in europe. we finally learned that after 18 months, the eurozone economy has emerged from recession. more than that, we've got increased investor interest. let me show you the results of the latest bank of america/merrill lynch fund manager survey. they are 17% overweight for the eurozone. this is the highest they've been in 5 1/2 years. 20%, a net 20% say they will further overweight during the course of the next year. that compares to a 30% overweight on the united states. so whatever you do with your money, i can tell you that the big money is increasingly going into europe. have a look at the gdp data for the second quarter at an annualized basis and you will see, hard to believe, but it's
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writ large, germany and france grew faster in the second quarter at an annualized rate than did the united states. oh, yes. fresh data today. in the meantime, you will see the eurozone overall grew 1.1%. obviously implicit in the two cylinders firing so strongly is other parts of the eurozone is not doing so well. in the meantime, you see treasuries or the bunds coming back up. you see the rise in the yields the same as in the united states. so moves on all the major markets. for the regard mark carney, the canadian who is running the bank of england was unable at the last meeting to get a full sweep unanimity on forward guidance. there was one detractor, one defector, which people didn't think would happen. mark carney not quite doing as well unifying the bank of england as we thought.
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meantime, let's check on energies and commodities with bertha coombs. >> thanks very much. we are watching oil here continuing to trade a little bit lower, notwithstanding what was a surprisingly strong inventory draw as far as crude. we saw a drawdown of 2.8 million barrels well ahead of what analysts were looking for. of that 1.4 million came from cushing, oklahoma, the nymex hub. we continue to see oil moving through there and that bottle neck really no longer an issue. meantime, gasoline was the big surprise. we saw drawdown of 1.7 million barrels. that was the direct inverse of what we had seen yesterday afternoon from the american petroleum institute. gasoline was rallying here. interestingly, despite all of this geo political rirvsk we're seeing, it used to be when we saw that kind of trouble in egypt, we'd see a rally. we're not seeing it here. nat gas is one of the big
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players here. >> thanks very much. let's turn our attention to the floor. bob pisani joining us with a look at what's moving. why did we take that leg down. >> every day for the last eight trading sessions since august 1st, europe -- we go down going into the european close, and we sort of come off of the lows after europe. there's a conspiracy theory going on, not a conspiracy theory, but take a look. it's happening again today. the theory is money is coming out of the united states, going into europe, and that's been -- this has been a regular chart pattern for a number of days now, since about august 1st. i want to talk home building. taylor morrison just recently came public. high-end home builder. new orders were well below expectations. it's bringing down some of the home builders. they had a very interesting comment on the conference call. they came out and said the higher mortgage rates, it's not affecting us. i think the reason is if that is true, they're very high end.
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$381,000 their average priced home. horton, the entry level, $252,000. folks, leave me, the slower orders, some people think that it is, in fact, some concern there. let's move on, talk about some other things that are going on. the macy's conference call, 10:30, should probably be ending now as parts of it i was listening in on. bottom line is the company came out and tried to soothe nerves a little bit. it's off the lows since the conference call started but they did reiterate there was weakness throughout the whole quarter. didn't just happen the last few weeks, but they are and they made a big point of this saying the last two weeks have been good on the back-to-school season. that's been moving the stocks to the upside. take a look at some of the other material names here. again, for the fifth, sixth day, coal stocks are moving up. this is the china play. steel stocks, slx, also moving up again. this has been a pattern now, up about 10% in the last six or seven trading sessions, and emerging markets, again, money slowly keeps coming into the
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stocks. there's the eem, sixth day in a row on the upside and even gold stocks moving to the upside as well. fourth or fifth day. there's little sectors of the market that are catching a bid even if there are beaten up sectors. >> thank you very much for that. bob pisani. it's a big day for this show. dominick has joined the team. he's back at the markets deck. >> thanks so much. america's biggest money managers are reporting their holdings. one of the latest from leon cooperman's omega adviser. he's taken new tech stakes in apple and oracle. on the flip side, he's cutting holdings in google, merck, and aig., the insurance giant. he's completely out, sold all of his stake in the spyder gold e 236789 f and he's completely out of all of his facebook holdings as well. >> great to have you on board. carl icahn is mad about a huge -- i beg your pardon. let's go back on that. carl icahn made a huge bet on
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apple yesterday, but when it comes to the best gauge of the tech sector, cisco might be your better play. we'll explain in a moment. my mantra? trust your instincts to make the call. to treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men.
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no doubt about it, cisco is going to be big news today reporting after the bell and it's one tech stock we should be
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keeping a closer eye on according to our next guest. david seeberg is head of sales at cowan. you think this is the bellwether for technology that people should be eyeing now. >> well, i think currently that's exactly what it is. i mean, just to give you a quick backdrop of what's been happening in tech, really since earnings, we saw 78% of tech companies have reported report upside surprise. so it makes the tech sector essentially the number one upside surprise as far as the earnings in the s&p 500. you know, what's been the response from the street? we've seen, you know, earnings revisions for '13 and '14 and, you know, i got to tell you, just seeing that move in that direction is a very, very positive sign. so i think, you know, earnings revisions trending up, that coupled with relatively low valuations, i think we're just getting going here, and i think cisco tomorrow could really help point the direction of this tech
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tape. >> i think it's hard to paint with a broad brush because there are disrupters within the sector that are, frankly, elbowing some of the stalwart names. if you look at an intel and ibm and the way they've behaved, what do you recommend for people here? should they get involved in the sector broadly? should they look for the beaten down value plays or should they jump on board with the outperformers? >> look, i can tell you this, i think that in general, i think tomorrow's earnings announcement is so important mainly because of what's going to be said in the conference call. i think given the fact that cisco is such a global, you know, company, chambers is going to get on that call and take comments about global tech demand. if those comments are positive, i think the entire sector we could see a nice move up. what i will say about -- let's talk about the networking sector in general. we've seen a lot of institutions really interested in owning that sector. a lot of money on the sidelines keeping a close eye on it waiting for cisco.
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the vanilla guys or on the sidelines waiting for the quarter. if it's a good quarter, it will force people into the stock. >> we're going to be talking about business or government spending when it comes to cisco as opposed to consumer spending on hand sets or whatever, where the margins are obviously under huge pressure and we see that in general day by day. just to the central point that you're making though, which of the other stocks that you think will move on cisco and that perhaps now people should position for? >> well, i mean, not to get stock specific, i would tell new sector specifically, it's the networking names i'd be looking at. our analyst paul silverstein previewed cisco. he made a comment saying that the conversations that he'd had, they have expressed a level of confidence that he hasn't seen in years. i think that's a pretty interesting comment to make and i think it's a pretty telling comment of what's happening. so tomorrow again we're going to get the numbers. we'll get commentary, and we're
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going to see sort of what direction this tech tape goes and hope it will be a very bullish commentary. one thing to add, i think you guys and investors should have their eye on really the rotation and what's going to happen in health care. you know, we've seen a lot of generalists play in health care, biotech specifically. and that's pushed biotech to astronomical levels. what we've since facebook is a lot of people start to take money off and get back into technology. we'll debate it when we come back. right now, 7 years of music is being streamed. a quarter million tweeters are tweeting. and 900 million dollars are changing hands online.
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welcome back to the program. we welcome scott back to set with breaking news. >> much is being made of carl icahn's new position on apple, but from the filings we've learned that lee cooperman has taken a new position. he's back in apple. i just got off the phone with him. he told me the following. he agrees with carl icahn that apple is cheap, said they have a new modest position, got back in in the low 400s. lee cooperman thinking that the new iphone is going to create some buzz. when talking about the entire
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space, he says he still thinks that qualcomm is the best play in that overall space, but clearly making it known that he agrees with carl icahn that apple is cheap in his words. they got back in in the low 400s and thinks the new iphone is going to create some buzz, and, you know, apple was right on the cusp of $500. we'll see what happens. >> everybody wants to be seen as the cheerleader for apple to take credit for it moving over $500. >> lee cooperman had been in, then he'd been out. now he says what he says is another new position so he's back in. >> all -- remember, this was the most owned share going back to 2012 among hedge funds, apple was. they piled in, they piled out. now you have cooperman, you have people getting back into this name, and, again, to the extent that signals they see the bottom and think they can ride it for another 10% upside, that's what people will focus on. plenty more to come on
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"halftime. >> we'll talk about this and much more. want to draw your attention to breaking news out of egypt. the vice president has stepped down. he was an important voice calling for moderation. again, wire reports suggesting that he has stepped down. this coming as nbc news has confirmed 145 deathins and up t 1,400 injured. >> coming up on the program, tim armstrong at aol apologizes after the very public firing. we'll have more next. re's one th in this life... you can't escape your demons. ♪ i thought i hung my tire chains up for good... but i can't shake this bad feeling... that i haven't seen the last of my old friend. ♪ quattrooooooooooooooooooo!!!!!!! ♪
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avo: what kind of financial consultant are you looking for? talk to us today. welcome back. aol's ceo apologizing after he publicly fired an employee. the whole thing was caught on tape. if you missed it earlier, here is what happened. >> if you think what's going on right now is a joke and you want to joke around about it, you should pick your stuff up and leave today and the reason is, and i'm going to be very specific about this, is patch from an experience -- put that camera down right now. abel, you're fired. out.
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>> pretty abrupt. the question now is whether ao l's ceo tim armstrong should have apologized because after that took place, he sent out an e-mail to the company saying he was sorry for the way it was handled. let's ask edward freeman, a business professor. thank you for joining us. >> good morning. >> so what do you think was -- first of all, did tim armstrong make a mistake and was the mistake firing the employee or apologizing for it? >> well, i think -- i would say if there's a mistake, it's the way it was done, abruptly and in public. there's never a reason for humiliating someone. now, i say this not knowing a lot of details about what came before. so i think when he apologized, you know, he realized that he had done this in a way that would not be good for the company or the employee.
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>> and certainly this has gotten a disproportionate amount of attention, the fact it was picked up by the media, the fact we're all talking about it, and he appears to have been pretty cold about it. but i guess i can't help but wonder, tim armstrong reacting, maybe there was a history with this particular employee or something, if it wouldn't have been better for him to just stand by the decision as opposed to going back on it. >> well, the problem when you do something -- what ceos do is often symbolic, and sometimes you do things and you don't realize the symbolic nature of what you're doing, and, you know, tim armstrong is responsible for the whole culture at aol, and he has to understand what the impact, and i think he did, what the impact of this very public act would be on the culture, and in particular on the trust of other employees. >> or alternatively this is a man that seeks public profile, that seeks reputation, and he didn't actually realize that his discussion with the staff was
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being recorded and that it would then be subsequently played out by news outlets. i suspect that also factors into his decision, and perhaps changes -- we've seen how policing has been changed by the way in which people have camera phones and record every movement of the police and then they don't engage in certain situations. i wonder if ceos will change their behavior as well. >> well, i think that's a really good point. the world is public now. you live your life, especially as a ceo, pretty much in public. there's really nowhere to hide, and we don't know what the impact of that really is on things like corporate culture. >> okay. edward, interesting, fascinating discussion. thank you for joining us on cnbc. it's good to see you again. the discussion continues, of course, about aol's ceo. thank you very much. final thoughts. >> we're basically going to watch shares of apple. can they crack the $500 mark. you know that's the focus on "halftime."
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>> you know "halftime" will be talking about apple as lee cooperman joins the fray of hedge funds getting in. arguably, this is the time of year to get into apple. this is when the products come out in advance of the holiday season. i don't know. >> it's a great debate to be having. thanks for joining us. that's all for us at "squawk on the street." now we'll hand it over to scott and "halftime." thanks so much. welcome to "the halftime show." four hours until the close. right here is where we stand on this wednesday on the street. dow is down some 80 points. there's the s&p and the nasdaq in negative territory as well. here is what we're following on "the half." summer swoon. what should you be doing? the traders have your best plays. pandora's pop. the streaming radio stock up more than 120% already this year, but can that momentum keep going? we'll debate the stock's next move. first, our top story, tech's comeback. the sector may be lagging, but don't tell that to facebook and


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